For years, we’ve been told again and again (and again) that Kinder Morgan’s proposed expansion of the Trans Mountain pipeline is desperately needed for producers to export oil to Asian countries and get much higher returns.

The way it’s been framed makes it seem like it’s the only thing standing between Alberta and fields of gold.

Small problem: Canadian producers already have the ability to ship their heavy oil to Asia via the existing 300,000 barrel per day Trans Mountain pipeline — but they’re not using it.

“Virtually no exports go to any markets other than the U.S.,” economist Robyn Allan told DeSmog Canada. “The entire narrative perpetrated by Prime Minister Trudeau and Alberta Premier Notley is fabricated.”

In 2017, the Port of Vancouver only shipped 600 barrels of oil to China. That’s less than a tanker load. That same year, the port shipped almost 13 million barrels of oil, or about 24 Aframax tanker loads, to the U.S.

In other words: oil tankers are being loaded in Vancouver, but instead of heading to vaunted Asian markets, they’re heading south to California.

Shipments to Asia reached their peak seven years ago when the equivalent of nine fully loaded tankers of oil left Vancouver for China. Since then, oil exports to Asia have completely dropped off.

Some experts suggest exports to Asia are very unlikely to rebound in the short-term, with producers from many other countries continuing to dominate such markets. Others take a more long-term view, remaining optimistic that opportunities will arise over time — and only after the pipeline is actually built

“There’s no appetite in Asia for heavy oil,” said Eoin Finn, former partner at KPMG, in an interview with DeSmog Canada. “They don’t have the refineries to refine it. And the world is swimming in light sweet crude that’s cheaper and easier to refine, and altogether more plentiful.”

“There’s no appetite in Asia for heavy oil. They don’t have the refineries to refine it. And the world is swimming in light sweet crude that’s cheaper and easier to refine, and altogether more plentiful.” https://t.co/XCN92a02eS

— DeSmog Canada (@DeSmogCanada) April 19, 2018

No guaranteed access to Asian markets

One challenge is that the Port of Vancouver can’t even physically fit the size of tanker required to economically compete with other shippers of oil to Asia.

The largest class ship that is allowed in Burrard Inlet is what’s known as an “Aframax.” It can only be filled to 80 per cent capacity due to depth restrictions. That means a tanker from the Port of Vancouver can only ship 550,000 barrels at a time.

Meanwhile, Very Large Crude Carriers — yes, that’s actually their name — are now embarking from Louisiana via its brand new port, carrying two million barrels each. They’re also used by many Middle Eastern producers.

Practically, this means that Trans Mountain will have a harder time competing with producers in countries that can pay far less to ship their cheaper-to-refine oil in much larger ships. Trans Mountain supporters suggest this could become quickly irrelevant if situations change: say, a war breaks out in the Middle East and takes millions of barrels per day offline.

There’s also no guaranteed demand for Alberta’s lower quality crude on the other side of the Pacific. While 13 producers and shippers have signed long-term contracts with Trans Mountain — a fact that’s leaned on heavily by the company to make its business case, as they represent 80 per cent of expanded capacity — none have buyers in Asia yet.

“It’s a bit of a chicken and egg scenario. You need to build that pipeline before people are going to spend billions of dollars configuring their refineries to take your crude,” Jackie Forrest of ARC Energy Research told the CBC in a 2017 interview.

It’s expected that “sample shipments” of oil would be sent to various markets for testing once the pipeline was built.

But there’s very little proven interest in Alberta’s hard-to-refine oil. Instead, Asian countries are continuing to rely on imports of light sweet crude from Middle Eastern locales like Saudi Arabia, the United Arab Emirates, Iran, Qatar and Iraq. At this point, that appears unlikely to change in a significant enough way to make Alberta oil competitive.

Price discount results from lack of capacity, not location

The reality is that Alberta oil will always sell at a discount to lighter crude with greater market access.

In fact, back in 2014 a vice-president at the Canadian Association of Petroleum Producers told the Toronto Star that “there’s always a natural discount in the range of $15 to $25 [per barrel].”

In recent years, the “discount” has hovered around $10/barrel.

Nothing about a new pipeline will change the fact that Alberta’s heavy oil takes more effort to refine into usable products and is located farther from major markets than most other sources.

“It’s the lack of pipeline capacity that creates the price discount for Alberta. It’s not where that pipeline capacity goes. It’s not the difference between the U.S. Gulf and Asia,” Tom Gunton, professor and director of Simon Fraser University’s resource and environmental planning program, told DeSmog Canada.

“It’s got to do with that there’s not enough pipeline capacity.”

When Trans Mountain was pitched in 2013, there was a legitimate shortage of pipeline capacity, a reality made more concerning to industry by massive production forecasts for future decades. It seemed like an imminent and long-term backlog was about to emerge — which would actually lead to a price discount.

But then the 2014-15 price crash happened, new pipelines came online and dozens of proposed oilsands projects were either scrapped or put on hold.

When former U.S. president Barack Obama’s vetoed TransCanada’s Keystone XL pipeline in 2015 the backlog idea began gaining traction once again. But the veto has since been rescinded by President Donald Trump.

Gunton said that if you combine Keystone with Enbridge’s Line 3 and the proposed Mainline expansion, “there is more than enough pipeline capacity to meet all of Alberta’s needs without Trans Mountain” meaning that no serious price differential will emerge.

TransCanada spill in South Dakota responsible for current discount

The main reason that Alberta is currently experiencing a larger differential than usual (around $25/barrel) is because TransCanada’s Keystone pipeline spilled almost 10,000 barrels of oil into a South Dakota field in November — the third incident from the pipeline since 2010.

That resulted in a two-week shutdown, and the pipeline has been running at 20 per cent reduced pressure ever since.

As Allan pointed out in a letter to the Calgary Herald, this means that around 120,000 barrels per day have been backlogged, accounting for the widening differential. You can basically see the moment when the spill happened on differential estimations, increasing from $11/barrel in November to $25/barrel in February.

It is not a lack of market access to Asia that gutted returns for oil companies — it’s a pipeline spill. The phenomena of spills squeezing pipeline capacity is something Allan has previously documented.

Gunton said that even the two reports submitted by Kinder Morgan to the National Energy Board — the first of which was striked as evidence after its author, Steven Kelly, was controversially appointed to the regulator — didn’t identify an “Asian premium.” Instead, they argued that some of the shipments out of Alberta would have to go by rail due to inadequate pipeline capacity, reducing netbacks to producers. That’s no longer true.

“That’s another big lie that there’s this big demand in Asia,” said Green Party leader Elizabeth May. “There’s this series of assumptions that are repeated so often that nobody questions them.”

Most expanded capacity will end up in California, not Asia

But while politicians like Rachel Notley continue to repeat the fiction “that there is now and will always be a pretty substantial market for bitumen in the Asia-Pacific” many analysts have identified that most oil shipped from the expanded Trans Mountain line via Vancouver (with a significant chunk already diverted in Abbotsford to Washington refineries) will end up in California in the short term.

A 2013 report from the University of Calgary’s School of Public Policy argued: “Movement of crude supplies originating in Vancouver should satisfy U.S. West Coast demand before the first barrel crosses the Pacific to Asia.”

This is mostly because California is facing declining domestic production and imports from Alaska’s North Slope. Additionally, it already has refineries in place to process heavy oil, and Albertan bitumen could directly compete with Mexican Maya, a similar quality crude.

Based on 2017 data, only 3.4 per cent of California’s foreign crude imports came from Canada. That same year, half of the state’s imported oil came from Saudi Arabia, Ecuador and Colombia — which can all produce at far lower costs than Alberta. The state’s Low Carbon Fuel Standard also rewards crude oil with lower carbon intensity, further benefiting OPEC exporters over Alberta.

“There’s no premium to go to California,” Finn said. “There’s probably a discount because it’s farther and costs more to have ships go down there.”

U.S. Gulf Coast remains most lucrative location

So where is Alberta’s slowly-but-surely increasing oil production supposed to go? Well, where it’s always gone — to the U.S. Gulf Coast, aided by TransCanada’s Keystone XL and Enbridge’s Line 3 pipelines.

Compared to shipping via tankers from Vancouver, the Gulf offers comparatively cheaper transportation fees and existing heavy oil refining capacity.

In addition, both Venezuela and Mexico’s heavy oil production have also been in steady decline in recent years, providing even more potential for Alberta to fill existing refinery capacity in the Gulf.

“As we implement climate policies and as the world transitions away from fossil fuels, production in Alberta is not going to grow very much,” Gunton said.

“It’s the highest-cost producer in the world. Consequently, the demand for pipelines is down. And there is more than enough pipeline capacity to meet all of Alberta’s needs without Trans Mountain.”

Economic circumstances have shifted dramatically since 2013 when Kinder Morgan first proposed the pipeline, which raises the question: does the company want to back away from the project for reasons that stretch beyond the opposition its facing in British Columbia?

Even with both the Alberta and federal governments discuss bailing out the private project, in an investor call on Tuesday, Kinder Morgan indicated the investment may still be “untenable.”

If the company walks, a government could either purchase the $7.4 billion project as hinted at by Premier Notley. Or, Kinder Morgan may opt to sue the Government of Canada via NAFTA.

Whatever happens, one thing seems certain at this stage: it’s not going to be predictable.

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The Canadian Association of Petroleum Producers (CAPP), Canada’s largest oil and gas lobbyist group, asked the federal government to introduce a carbon pricing scheme that would “recycle” revenues back into oil and gas operations, documents released via Freedom of Information legislation reveal.

The documents, released to Greenpeace Canada, contain an August 2016 submission CAPP provided to the federal government in which the group argues a price on carbon should be revenue neutral for industry.

“One of the decisions governments need to make is what to do with the revenue generated from the carbon pricing mechanism,” the document reads. “There are many options available to enable innovation for distribution of this generated revenue; CAPP recommends that to enable innovation, revenue generated by industrial emitters is best recycled back to industry for technology and innovation.”

Keith Stewart, senior energy strategist for Greenpeace Canada, says, “The oil industry formally supports action on climate change (in exchange for pipeline approvals) but wants to shape how the policy is implemented so as to minimize the impact on its own operations.”

In a summary piece for Policy Options, Stewart says the recommendation to channel carbon taxes back into industry operations “dramatically weakens the effectiveness of the federal policy.”

“The primacy advantage of a carbon price is that it sends an economy-wide signal to investors and consumers, leading to a shift to lower-carbon options. If the largest share of the revenue goes back to the oil industry, the signal to investors to switch to low-carbon energy is muted.”

Pressure from CAPP comes as the federal government is preparing to release the first Gazette I version of greenhouse gas emissions for the oil and gas sector later this month.

Industry lobbying efforts successfully staved off greenhouse gas emission regulations for the oil and gas sector throughout the entirety of former Prime Minister Stephen Harper’s 10-year rule. Further lobbying efforts also stymied a European effort to label fuel from the Alberta oilsands as more carbon intensive than other fossil fuels.

Under the international Paris Agreement and the Pan-Canadian Framework on Clean Growth and Climate Change, Canada has committed to a 2030 target of reducing greenhouse gas emissions by 524 megatonnes of carbon dioxide equivalent, a 30 per cent reduction from 2005 emission levels.

Environment and Climate Change Canada estimates new oil and gas regulations will reduce emissions by 20 megatonnes (MT), greater than Nova Scotia’s total emissions at 17 MT.

The upstream oil and gas sector is Canada’s fastest growing source of greenhouse gas emissions.

In addition to imposing a nationwide carbon pricing mechanism — provinces have until 2018 to implement one or have one imposed — the federal government is also implementing regulations to reduce methane emissions from the oil and gas sector.

CAPP Lobbies Government to ‘Recycle’ #CarbonTax Revenues Back to Oil Industry https://t.co/U6ydduAMfn #ableg #cdnpoli @carollinnitt pic.twitter.com/JEtq49vlNk

— DeSmog Canada (@DeSmogCanada) March 3, 2017

CAPP’s Fight Against Methane Regulations

Additional internal documents released to Greenpeace Canada show CAPP overestimated the cost of implementation and argued the new rules will damage industry’s competitiveness.

“Canadian production is already at risk of being displaced by U.S. competition,” a CAPP presentation made to the federal government in September 2016 reads.

It is “not a good time to impose additional costs on industry,” a slide states.

In March 2016, former president Barack Obama and Justin Trudeau announced an ambitious plan to nearly halve methane emissions from the oil and gas sector by 2025.

In Canada the reductions would be the equivalent of removing every passenger car from the roads in both B.C. and Alberta.

Canada’s forthcoming methane regulations are expected to outline how the sector will achieve those reduction targets.

CAPP, however, recommended the federal government delay implementation of methane regulations beyond the currently proposed 2020 and argued some aspects of the rules, such as mandatory retrofitting of all equipment or regular equipment inspections, should be voluntary.

CAPP’s argument that the new rules are too costly is simply a negotiating tactic, Stewart says.

“CAPP says that the cost to industry of implementing the federal methane regulations would be roughly triple what Environment Canada calculates: $4.1 billion over eight years, compared with Environment Canada’s estimate of $1.3 billion,” Stewart writes.

“Industry push-back on environmental regulations is to be expected and is most effective when conducted behind closed doors.”

Image: Machinery operates in the Alberta oilsands. Photo: Kris Krug/DeSmog

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For years, the Canadian public has been besieged with the same message: Alberta’s pipeline network is completely maxed out, meaning the oilsands are landlocked and new pipelines must be constructed to allow producers to ship their product to new markets and eliminate the discount imposed on exports.

It’s a notion that’s been repeated by politicians of all stripes, including Alberta Premier Rachel Notley and Prime Minister Justin Trudeau.

But there’s no merit to that argument, according to a new report from the Washington, D.C.-based nonprofit Oil Change International.

In the briefing, titled “Canada Not Running Out of Pipeline Capacity,” authors Adam Scott and Greg Muttitt point out that there’s around 400,000 barrels/day of unused capacity in the network, easily accommodating exports for projects currently operating and under construction.

This calculation was derived from the organization’s Integrated North American Pipeline model, which then concluded the network was 89 per cent full.

As a result, the only reason that new pipelines like Kinder Morgan’s Trans Mountain and TransCanada’s Energy East would be required is if there’s a massive expansion of the oilsands, a move that would arguably undermine the Paris Agreement and other international climate commitments (an argument also made by David Hughes in his thorough June 2016 report for the Canadian Centre for Policy Alternatives).

“When you look at the reality of the situation building new pipelines would not increase the amount of money that producers receive because there isn’t a shortage,” Scott told DeSmog Canada. “And there’s no discount anymore that could be relieved by building a new pipeline.”

“It’s really that missing piece of the puzzle that Canadians are not getting good information on.”

Only Reason for Kinder Morgan and Energy East Would Be For Huge Oilsands Expansion

Scott isn’t discounting the historical existence of an artificial price differential. Rather, he’s arguing that it no longer applies.

There was a serious pipeline constraint in 2012 and 2013 that resulted in a transport-related price gap between Western Texas Intermediate (WTI) and Brent Crude with Western Canadian Select (WCS). In other words, the lack of pipeline access rendered bitumen production and transport less economically viable.

But that changed with the construction of new pipelines between Illinois, Oklahoma and refineries on the Gulf Coast in 2013 and 2014, as well as the removal of a 40-year ban in the U.S. on exporting domestically produced oil in December 2015 (which the report suggests “reduced market distortions between shale oil and oil sands crude oil at U.S. Gulf Coast refineries”).

Now, oilsands producers are facing three major issues that ultimately have nothing to do with pipelines: lower quality crude, distance from major markets (almost exclusively in the U.S. given access to heavy oil refineries) and extremely low global prices.

“In reality, that differential is basically gone now,” Scott says.

He suggests that the pipeline network may come close to full in 2018, resulting in a “very brief” spike in prices.

But there are more expansions planned for the network that will likely come online to loosen that bottleneck: Enbridge is currently planning to add 800,000 barrel/day worth of pipeline capacity to its mainline system by 2020, which wouldn’t require new permits as it would be an expansion rather than a new pipeline. Kinder Morgan and Energy East wouldn’t be constructed until 2020 or so.

“It has nothing to do with the decision about current pipelines,” he says.

Taking the Enbridge expansion into consideration, the Oil Change International report concludes that “only significant additional plans to increase production beyond projects already operating, in-construction or sanctioned would change this situation.”

One Million Additional Barrels/Day Allowed Under Oilsands Cap

Here’s a bit of rough math to provide some additional context.

The oilsands currently produce about 2.4 million barrels/day and 70 megatonnes (Mt) of carbon emissions per year. Alberta’s new emissions cap on the oilsands allows for only 100 Mt per year.

Assuming that per-barrel emissions stay constant (which is unlikely given that most new production will occur via the more energy intensive process of in-situ), the cap allows for another one million barrels/day or so of production, up to around 3.4 million barrels/day.

David Hughes has also calculated the 45 per cent increase in production could be accommodated via existing pipeline and rail networks, which includes a 15 per cent surplus for maintenance and pipeline problems.

Specifically, the potential addition of 800,000 barrels/day from Enbridge added to the 400,000 barrels/day in current spare capacity allows for 1.2 million barrels/day in new production.

If Kinder Morgan Trans Mountain or TransCanada’s Energy East are approved by the federal government, it will serve as a clear signal that nobody’s taking that cap seriously.

That’s the assumption that allows the Canadian Association of Petroleum Producers to estimate that oilsands production will increase from 2.4 million barrels/day in 2015 to 3.7 million barrels/day in 2030, and the National Energy Board to calculate that oilsands exports could increase to 4.5 million barrels/day by 2040.

Oil Industry Is ‘Betting That In The Future the Government Will Ignore Its Own Climate Policy’

But such a spike can’t happen if Canada has any intention of meeting international climate commitments, especially its Paris Agreement target of reducing emissions by 30 per cent below 2005 levels by 2030.

A widely shared report published in September by Oil Change International titled “The Sky’s Limit” concluded that no new oil, gas, or coal extraction projects can be built if the world has any legitimate interest in staying below the mark of two degrees celsius above pre-industrial averages.

“Investment in new projects beyond what’s already under construction has stalled completely with the oil prices,” Scott says. “The oil industry knows these pipelines aren’t required and they’re betting that in the future the government will ignore its own climate policy and that somehow, miraculously, the price of oil will recover. Both of those things would be required for those pipelines to be needed.”

A recent analysis by economist Robyn Allan found that constrained oil production in the oilsands is exclusively the result of low oil prices, not restricted pipeline capacity. Allan found a total of 2.7 million barrels per day of oilsands production was cancelled between January 2014 and September 2016 due to the low price environment.

Per-Barrel Emissions Have Increased by One-Quarter in Last Decade

It also assumes that technological innovations will help decrease per-barrel emissions in order to meet those climate commitments.

Yet recent history shows little precedent for that: a Pembina Institute report from August 2016 noted that total emissions intensity has increased by 25 per cent between 2004 and 2014.

Technologies such as using solvents instead of gas to extract bitumen via in-situ isn’t very advanced, Scott says, and the increasingly popular technology features a far higher per-barrel emissions rate in both carbon dioxide and sulphur dioxide than open-pit mining.

“With the crash in oil prices, [research and development] budgets and the willingness of the oil industry to spend extra marginal dollars on extra technology that would increase the cost is gone,” he says.

“We don’t expect the oil industry will have a real ability to dramatically reduce emissions intensity.”

Yet politicians across Canada continue to push for pipelines, with the Kinder Morgan Trans-Mountain project expected to receive approval shortly before Christmas.

Scott suggests that such elected officials “are completely ignoring the reality of what the Paris Agreement means” and those who contend that new fossil fuel development can be allowed under such commitments “don’t understand climate science.”

“We’re not saying we need to shut down the fossil fuel industry tomorrow,” Scott says.

“But Canada can’t meet its own obligations to the Paris Agreement if it intends to allow for that expansion. In that way, the decision of whether or not to build these pipelines is a direct choice from politicians about whether or not they’re going to honour their obligations on climate change. It’s that simple.”

Image: Alberta Premier Rachel Notley, Prime Minister Justin Trudeau and Calgary Mayor Naheed Nenshi. Photo: Government of Canada

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The Alberta government titled its 2016 budget “The Alberta Jobs Plan” but there’s one group in the province that’s disappointed it will not see its jobs proposal funded.   The reclamation and clean-up of abandoned oil sites was proposed as a potential job creator by the Petroleum Services Association of Canada (PSAC). With over 37,000 orphaned and inactive wells across the province and thousands of unemployed, highly-skilled workers, PSAC said the provincial government should dedicated funds to well clean-up and reclamation.   It’s a proposal similar to Saskatchewan Premier Brad Wall’s ask for federal funding to clean up his province’s orphaned oil wells. His request for $156 million went unanswered in the federal budget. Wall argued the funding would have put 1,200 people back to work.   Alberta’s economic downturn has seen 40,000 jobs lost in the energy sector. PSAC argued putting money into decommissioning oil sites could reclaim some oil and gas sector jobs and get companies back to work.    “We are losing tens of thousands of workers from the oil and gas services sector and, along with them, the intellectual capital and expertise we need when the economy turns around,” Mark Salkeld, president and CEO of PSAC, said.   PSAC has advocated for several months that $500 million in funds, whether from the province or federal government, be put into a decommissioning program for orphaned and inactive wells.   But on budget day in Alberta the only funding dedicated to this issue was a $30.5 million injection into the Orphan Well Association, a group funded predominantly by industry (they received a one-time boost of $30 million from Alberta a few years ago) that cleans up sites abandoned by bankrupted companies.   The cost of reclaiming a single well starts around $10,000 but can become millions in some cases. Since its inception just over two decades ago the Orphan Well Association has reclaimed over 650 wells. Over 540 wells have been abandoned in Alberta in the last 12 months, up four times from previous years as especially junior and intermediate companies have struggled with record-low oil prices. An estimated 700 orphaned wells are the result of bankruptcy.   Brad Herald, vice president of Western Canadian Operations with the Canadian Association of Petroleum Producers and director of the Orphan Well Association, said the group is on its way to reclaiming 160 abandonments a year, which is up from 40 to 50 per year previously.   “We’ve effectively quadrupled the wells we’re going to put to bed in just a couple years,” Herald said.   A lack of fresh funds to handle the growing number of abandoned sites means the Alberta government hopes sticking with a polluter-pays model will pan out in the long run.   “Many Albertans and Canadians alike don’t want their tax dollars going to cleaning up after someone else,” Alberta Energy Minister Marg McQuiag Boyd said in a statement to DeSmog Canada.   Don Bester, president of the Alberta Surface Rights Group, agrees. Tax-dollar subsidized reclamation creates the expectation government will simply pay for industry’s abandoned projects, which, according to Bester, removes any incentive for companies to carry out costly clean-up.   “Oil and gas companies that are not in trouble are going to just say ‘well, why not just leave them? Somewhere down the road the government will clean them up.’”   In the meantime, however, thousands of inactive wells dot the provincial landscape on at times valuable farmland, like environmental potholes left for future generations.

Barry Robinson, lawyer and National Program Director with Ecojustice, said if there was ever a time for government to step in with funds for orphaned wells, it would be now during the economic downturn when costs are low and people need jobs.   “The sooner you clean up the really old wells the less environmental risk you have,” he said.   Robinson said government investment could get clean up going in the short term while a longer-term repayment program could be put in place through royalties.   “Ultimately polluter-pays is the way to do it,” Robinson said. “We’d like to see companies post security for the abandonment and reclamation right at the time the well was drilled.”   It would avoid the current situation of companies going bankrupt and disappearing, leaving their wells to be handled by the province. For Robinson, it’s a long-term solution, which, when it comes to Alberta’s orphaned wells, have been in short supply.   Robinson says a big issue is the absence of timeline rules in oil and gas regulations. Without meaningful time limits regulators have nothing to enforce.   “Companies are not doing anything wrong or illegal by simply leaving wells inactive,” Robinson said, adding there are at times “good reasons for wells to be inactive.”     But he said there are orphaned wells dating back to the 50s and 60s that still have not been dealt with.   The longer a well sits abandoned, the higher the risk of accidental release or groundwater contamination.   For the landowners Bester works with, these legacy wells mean they’re stuck with inoperable and potentially hazardous land. 

During a major review of Alberta’s royalty structure last year, the Alberta Surface Rights Group recommended the government integrate clean up payments directly into the oil and gas regulatory structure.   Bester said he also recommended the government require companies to clean up old well before building new sites. Ultimately his group’s recommendations went nowhere.   Bester’s group has met with Environment Minister Shannon Phillips and Minister McQuiag-Boyd on the issue and is hopeful a regulatory change will come this spring during the legislative session.

Image: Chris & Lara Pawluk/Flickr.

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During her recent election campaign, Alberta NDP leader Rachel Notley pledged to raise Alberta’s minimum wage from $10.20 an hour to $15 by 2018, which would make the province’s minimum wage the highest in the country — by far.

Not so fast, objects economist Ron Kneebone. In a National Post commentary a week after the election, Kneebone argues that raising the minimum wage will do little to fight poverty. He suggests other, less achievable, policies.

Notley’s platform also included a pledge to raise corporate tax rates, review oil and gas royalties and cut greenhouse gas emissions.

Not so fast, objects economist Jack Mintz. In a National Post article published the day after Kneebone, Mintz asks, “how many times can you skin the cat?” If Notley raises corporates taxes, capital will take flight, he predicts. “Some companies are planning to shift profits out of Alberta if the rate goes up to 12 per cent,” he says, as if profits don’t already leave the province because the energy sector is mainly foreign owned.

A third promise Notley made was to promote the upgrading and refining of Alberta’s natural resources within the province to deliver better value to Albertans.

Not so fast, objects economist Trevor Tombe. In a National Post commentary six days after Mintz, Tombe calculates that oil and gas extraction adds more value per job than refining. But the real comparison should be refining in Alberta compared with refining — and adding value — elsewhere.

Aside from being economists, having serious problems with NDP proposals and getting major play in the National Post, Kneebone, Mintz and Tombe share something else: they are associated with the University of Calgary’s School of Public Policy (SPP). Mintz is school director, Kneebone director of the tax and economic growth program, and Tombe an economics department academic who publishes frequently through the SPP.

In just one month, the SPP had taken three swipes at Notley’s platform.[view:in_this_series=block_1]

And there will be more to come because the SPP isn’t just a degree-granting academic institution, it’s also an industry-supported think tank embedded within the university.

Like all industry-backed think tanks, the SPP’s purpose is to produce research that supports the industry and the free market. If Notley strays too far afield from industry consensus, rest assured the SPP will be on her case.

Industry’s Big (Reputational) Problem

Canada’s oil and gas industry has had a big problem: it’s the least trusted source of information about energy issues.

This was a key finding of a survey commissioned in February 2015 by Alberta Oil, a magazine, as DeSmog’s Emma Gilchrist points out, “destined for the desks of the energy sector’s senior executives and decision-makers.”

These energy sector executives may oppose minimum-wage and corporate-tax hikes and increased oil sands refining in Alberta, but it’s futile for them to fulminate publicly about Notley’s plans, if the Alberta Oil survey is to be believed.

Only 14 per cent of survey respondents found energy company executives to be a credible source of information on oilsands development, and just 11 per cent trusted industry information about carbon emissions.

Perhaps the tens of millions of dollars Enbridge was spending to promote its pipelines and the millions more spent by the Canadian Association of Petroleum Producers to persuade Canadians about the amazing benefits of oil sands development were well and truly wasted.

But Alberta Oil’s survey did reveal a ray of hope for the industry. At 53 per cent, respondents regarded the academic community as the most trusted and credible source of information. So if industry executives can’t speak for the industry, perhaps academics can.

The School of Public Policy, Born of Oil Money 

The School of Public Policy was established in 2008 with a donation of $4 million from James Palmer, one of Canada’s leading oil and gas lawyers, Palmer perhaps recognizing industry’s credibility problems. At the time, all three major Alberta political parties were calling for higher royalties.

Who would speak for the industry?

With Palmer’s money the university hired tax specialist Jack Mintz, CEO of the corporate-sponsored C.D. Howe Institute, to head the SPP. Like C.D. Howe, corporate influence in the SPP is heavy. The connections to one company in particular — Imperial Oil — are extensive. (This is not to suggest that industry money can buy supportive academic research, but that academics sympathetic to business and conservative viewpoints are recruited for such positions.)

Mintz himself is an Imperial Oil director and a director of the Imperial Oil Foundation, that doles out $6-to-$7 million a year to organizations in communities where Imperial Oil operates, to build good will. Like all directors, Mintz is obligated to advance the best interests of the company, as former Alberta Liberal leader Kevin Taft points out. “The directors, in exercising their powers and discharging their duties, shall act honestly and in good faith with a view to the best interests of the corporation,” says Imperial Oil’s 2014 Management Proxy Circular. As head of SPP, Mintz’s loyalties seem murky.

Palmer was one of Canada’s most celebrated energy lawyers (he died in 2013), specializing in corporate mergers and acquisitions. He was on the boards of numerous oil and gas companies and for a few years lobbied the federal government for Imperial Oil and its parent company, ExxonMobil, promoting their oil pipeline proposals.

Imperial Oil CEO Tim Hearn had just retired and joined the SPP’s advisory council; his company donated $1 million to the school and another $200,000 several years later. Hearn’s successor, Bruce Marsh, was a featured speaker at SPP’s kick-off conference. Jean-Sébastien Rioux, recruited to lead the SPP’s Master’s program, had previously headed Imperial Oil’s lobbying and public relations efforts.

The school seems a marriage of business, ideology and politics. A decade before it was established, a group of political scientists, historians, and economists at the university emerged as the intellectual backup for neoliberal and social-conservative causes.

Advancing the Conservative Agenda

Dubbed the Calgary School, these academics coalesced around arguments to slash social programs, downsize government, promote business, deregulate the economy, and cut taxes. Led by political scientist Tom Flanagan, the Calgary School had enormous influence on federal policy and politics.

It helped shape the direction of the Reform Party and Canadian Alliance and dominated the thinking of Stephen Harper, who studied under Calgary School professors, selected one — Flanagan — as a close adviser, and picked the student of another — Ian Brodie, who studied under political scientist Ted Morton — as his first chief of staff.

After the school was up and running, the entire Calgary School migrated into its ranks. Brodie became director of research, Flanagan a distinguished fellow and Morton an executive in residence. Economist Robert Mansell, a Calgary School associate who had been one of Harper’s professors, became the SPP’s academic director.

Four SPP program directors, including Kneebone, are, or were, Fraser Institute fellows. SPP receives about $200,000 a year from Peter Munk’s Aurea Foundation, which has emerged in recent years as paymaster to the right through its funding of the Fraser Institute and other neoliberal think tanks.

And there are the political connections. Flanagan is well-known as a mentor to former Wildrose leader Danielle Smith; Morton was a minister of Energy in the Ed Stelmach government; and Jean-Sébastien Rioux was chief of staff to Jim Prentice when he was federal minister of Indian Affairs and Industry.

Given the funding and the lineup of personnel, it’s not surprising that SPP’s research is hostile to Notley’s program.

They’ll be carefully monitoring the NDP’s moves on the energy and environment files. SPP authors have already sounded the alarm that Alberta must get its bitumen to markets in the Pacific Rim as quickly as possible, or risk losing out to competitors. Canada needs to get on with the Northern Gateway and Trans Mountain expansion projects as quickly as possible, the authors urge.

A paper by Trevor Tombe about “the facts” on Canada’s energy trade presents as one fact the claim that promoting energy trade “requires lowering investment barriers and creating a predictable and stable investment climate for foreign direct investment,” certainly not the capital flight that Jack Mintz threatens.

Notley will be looking across the legislative aisle for clues to opposition strategies. She should also be looking over her shoulder to the School of Public Policy for the “research” and policy that will provide the real opposition to her government.

Image: Industry Minister James Moore speaks at a Calgary School event via Flickr

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In late May, Canada’s “energy leaders” met in Toronto for the Energy Council of Canada's Canadian Energy Summit.

The theme of the summit? “Telling the Energy Story.”

“The aim is to raise awareness and improve understanding of the many ways that the energy sector influences the economy, regional development, innovation and aboriginal partnerships across Canada,” a press release proclaimed. “We believe that improved understanding will lead to better-informed energy dialogue and energy decisions.”

Sounds nice and all, but there’s a catch: the various players in Canada’s energy debate are telling very different stories.

While industry emphasizes jobs and economic growth, environmentalists and First Nations focus on air and water contamination, climate change and aboriginal rights.

The problem for the energy sector isn’t “telling the story” — it’s the massive logic gap between their story and the very real concerns of the Canadian public.

Right now, Canada’s energy debate is like a dysfunctional family dinner, with drunk Uncle Ed blowing a gasket on one end, Aunty Hilda screaming back and everyone else staring down at their dinner plates wishing they’d stayed home.

On the one hand, you hear rhetoric about oilsands destroying the planet and needing to be “shut down” and on the other hand you hear oil execs talking about extracting as much bitumen as possible out of the ground ASAP.

“Those extreme arguments are the ones that make everybody roll their eyes,” says Ken Chapman, former director of the Oil Sands Developers Group and proponent of triple-bottom line resource development.

“And there’s about 20 per cent on one side and about 20 per cent on the other side and neither one of them will ever bridge that gap.”

Left watching the shouting match are the 60 per cent of Canadians who aren’t on either extreme, Chapman says.

“The 60 per cent in the middle don’t know who to believe, don’t know who to trust and don’t know who to rely on,” he told DeSmog Canada.

Canada’s energy debate is stuck in what’s known as a “logic schism,” in which two sides talk past each other, impeding meaningful dialogue.

“In a logic schism, a contest emerges in which opposing sides are debating different issues, seeking only information that supports their position and disconfirms their opponents’ arguments,” describes Andy Hoffman, a professor of sustainable enterprise at the University of Michigan.

“Each side views the other with suspicion, even demonizing the other, leading to a strong resistance to any form of engagement, much less negotiation and concession.”

Instead of leading the way, the federal government has been part of the problem.

In October, Canada’s Minister of Natural Resources Greg Rickford spoke to a closed-door meeting of about 40 to 50 oil and gas executives, urging them to get outside the board room and pitch projects to the public to win the public relations battle over energy.

“Enhance and expand your outreach. Communicate more effectively and clearly to Canadians with solid facts and evidence,” Rickford said, according to the documents revealed through an Access to Information Request.

Notably, Rickford mentioned nothing about improving performance in the oilsands — Canada’s fastest growing source of greenhouse gas emissions.

CAPP spokeswoman Chelsie Klassen told The Guardian that industry is taking Rickford’s advice and “embarking on a different level of engagement,” including “moving to a ground campaign model to activate industry supporters.”

Since then CAPP has opened an office in Vancouver to bolster its “Canada’s Energy Citizens” campaign.

CAPP is trying to spread the message that oilsands producers share values around developing the resource sustainably and transporting it safely, CAPP’s CEO Tim McMillan told the Vancouver Sun.

While there’s no doubt some truth in that statement, it overlooks the fact that CAPP has fought new greenhouse gas regulations and successfully lobbied to weaken Canada’s environmental laws — preventing Canada from “acting responsibly.”

It’s little wonder that a poll by Alberta  Oil Magazine found that fewer than one in 10 post-secondary graduates find oil and gas industry associations credible when it comes to carbon emissions.

So who can Canadians trust and how can we move beyond the dysfunctional dinner debate?

“Everbody is trying to prove each other wrong on the facts and quite frankly this is now like religious belief. And it doesn’t matter what the facts are; it’s the belief systems that are dominating,” Chapman says.

“What is open yet is the adult conversation, as opposed to the elementary school recess conversation.”

This week, well-known environmentalist Tzeporah Berman stepped into that “adult conversation” space with an op-ed in the Toronto Star:

It’s time for a new, honest conversation in Canada. It’s time to recognize that the oilsands are, in fact, a technological marvel that took great Canadian ingenuity and acumen. It’s also time to acknowledge that when we began the exploration of the oilsands we did not know what we know today.

Finally, something most Canadians can actually agree on.

 “We’re going to be in the fossil fuel business for a while,” Chapman said. “We have a responsibility to do it better. [The leadership] will have to emerge, but the leadership isn’t in two extremes.”

With the new NDP government in Alberta, Chapman sees an opportunity for a significant change.  

“There are calmer heads, cooler heads, deeper thinkers and people who understand complexity now dealing with the issue at the political level,” he said.

The first step is acknowledging that the issues in the oilsands can’t be solved with public relations. No advertising campaign, faux grassroots outreach effort or multi-million dollar messaging exercise is going to address growing greenhouse gas emissions, habitat destruction, air and water contamination and treaty violations.

Demonizing the oilsands as a planet-killing monstrosity also isn’t going to move us any closer to a responsible management regime.

The first step to recovery is acknowledging you have a problem — and what we have in in the oilsands is not a PR problem, it’s a performance problem due to a lack of regulation. And it’s high time Canadians got the conversation they deserve about how to do better.

Image: CAPP

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After a rough year of collapsing oil prices and the embarrassing dethroning of Alberta’s longtime Progressive Conservative government, the oil and gas industry could use a win. The latest campaign from the Canadian Association of Petroleum Producers (CAPP) was probably designed to be one.

Alas.

Developed as part of CAPP's ‘Energy Citizens’ movement, the ‘Raise your Hand’ campaign is well-designed and clearly expensive. Online and off, it features smiling multiracial faces with hands raised — overlayed with hand-drawn outlines of patriotic maple leaves. There are cheerful videos, interactive bus shelter ads and an online submission form to stay connected. It even has a hashtag (#ryhcanada), the extremely limited Twitter impact of which must be giving at least one advertising executive an ulcer right now.

As Mark Hume noted in the Globe and Mail this weekend, an ad campaign that attempts to co-opt patriotism for its own ends is hardly something new. NGOs have done it for years. So have McDonalds, Molson's beer and Roots. And yet, as Hume says, “CAPP’s slogan — 'Raise your hand because you are proud of Canada’s oil and natural gas' — doesn’t quite have the same ring as one that urges you to raise your hand against racism, ignorance or disease.”

Hume writes that the campaign could have been more successful, had it not been launched in the same week as a massive oil spill in Santa Barbara, which reminded “Canadians — and especially British Columbians where two new oil pipelines are proposed — what happens when one of those .001-per-cent accidents happen.”

I’m not so sure.

While the campaign is not a failure on par with the spectacular collapse of BC Ferries ‘#NameAFerry’ contest, its inability to spark public enthusiasm is not surprising. Even without the Santa Barbara oil spill, it’s reasonable to wonder if pipelines and patriotism fit together as naturally as the industry would have us believe. After all, it’s hard to raise our hands in blind allegiance when the failures and questionable behaviour of industry executives are so hard to ignore.

• Raise your hand if you remember that two years after it became public, CNRL is still unable to stop a slow leak at its Cold Lake in-situ drill site.
• Raise your hand if you recall how Plains Midstream — the Canadian analogue of Plains All American (the company whose failed pipeline spilled all that oil in Santa Barbara) — was fined $1.3 million for two giant pipeline spills in Alberta and was recently ordered to undergo an independent review of their safety procedures?
• Raise your hand if you remember how the industry leaders in oil and gas fought hard to keep employing temporary foreign workers, limiting opportunities for those smiley Canadians featured so prominently in their advertising?
• Raise your hand if you’re doubtful of the capabilities of Western Canada Marine Response Corporation touted by CAPP in the campaign after its slow response to Vancouver's relatively minor English Bay oil spill?
• Raise your hand if you saw the news this week that federal Industry Minister Greg Rickford spoke to an October 21, 2014 closed-door meeting of CAPP executives encouraging them to "work harder and spread the message of the oil industry?"

I could go on.

If recent polling is correct, 72 per cent of Canadians want to see more jobs created in the renewable energy industry. Fifty-eight per cent of Canadians go even further, wanting to see oil and gas use phased out in favour of renewable solutions. And even the Harper government has publicly acknowledged that climate change demands at least a little immediate attention.

So to the folks at CAPP and their marketing agency of record, may I humbly suggest an edit to your ask? Something a little more measured, a little more Canadian.

Raise your hand if you acknowledge that while oil and gas and other extractive industries are a big part of the Canadian energy mix now, they don’t have to be forever. That pipelines fail and transporting oil and gas is inherently dangerous. That if Canadians want to meet our climate goals without having to buy carbon credits from other countries, we need to start investing more in renewables.

Raise your hand if you agree we all deserve a more nuanced conversation about Canada's energy future.

Image Credit: CAPP

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A film about a B.C. indigenous leader torn between two worlds as his people grapple with the impact of hydraulic fracturing on their territory will premiere at the Hot Docs Film Festival in Toronto Tuesday night.

Fractured Land follows Caleb Behn, a young Dene lawyer, as he navigates the conflicts on his physical terrain — where fracking is taking its toll on his land and water in northeastern B.C. — and the conflicts within himself as he struggles to reconcile his traditions with the modern world.

Filmmakers Fiona Rayher and Damien Gillis followed Behn for four years, capturing hundreds of hours of footage of him on his territory, at law school in Vancouver and even consulting with New Zealand’s Maori people, who are also under siege by the fracking industry.

Fractured Land is less an environmental film and more an intense personal tale of Behn’s struggle to come to grips with complex issues such as fracking, resource politics and Canada’s colonial legacy.

The tension is illustrated most clearly by the contrast of Behn’s parents — his mother is a high-ranking oil and gas officer trying to make change from the inside and his father is a residential school survivor and staunch environmentalist.

Fractured Land Official Trailer from Fractured Land on Vimeo.

Behn has blended those two influences to become a young man who sports a Mohawk and tattoos beneath his business suit. In the film, he sits down with Janet Annesley, the former vice president of communications for the Canadian Association of Petroleum Producers. It’s a scene that makes you wriggle in your seat, but it results in one of the film’s more poignant moments when Annesley drops this line: “I think to some degree we are all fractured within ourselves.”

With B.C.’s liquefied natural gas (LNG) export dreams, those fractures are only set to grow for Behn. The gas intended for export would be derived through fracking on his land, which involves drilling deep underground and then fracturing the rock via a blast of high-pressure water, sand and chemicals. The emissions from fracking and LNG plants threaten to triple B.C.’s carbon footprint — rivalling the Alberta oilsands — but the industry also provides jobs for Behn's people.

The documentary avoids becoming another enviro film about emissions statistics or scary fracking tales and charts a different, more universal storyline about, as Behn puts it, “how to best use our heartbeats.”

Hot Docs Screenings

– Tuesday, April 28 at 9 p.m., Tiff Bell Lightbox

– Thursday, April 30 at 2:30 p.m., Scotiabank Theatre

– Saturday, May 2 at 4 p.m., Scotiabank Theatre

The film will have its broadcast premiere on CBC’s Documentary channel later this year.

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Alberta Oil Magazine just published its National Survey on Energy Literacy, the culmination of 1,396 online interviews of a representative sample of Canadians conducted by Leger.

The results are particularly interesting coming from Alberta Oil, a magazine destined for the desks of the energy sector’s senior executives and decision-makers.

Summing up the survey’s findings about “The Issues,” Alberta Oil editors write that opposition to energy projects is “not just for West Coast hippies anymore.”

Indeed. There are quite a few nuggets in the survey’s findings that are probably causing a headache or two in Calgary’s corner offices this week. We round up the Top 5.

1) Opposition to the proposed Kinder Morgan Trans Mountain pipeline is just as serious as opposition to Enbridge’s proposed Northern Gateway pipeline — if not more so, according to the survey. What’s more, the more highly educated citizens are, the less likely they are to support Trans Mountain or Northern Gateway. Hmph, maybe the anti-pipeline crowd isn’t all unemployed hippies after all?

2) Fewer than one-in-ten post-secondary graduates find oil and gas industry associations credible and trustworthy when it comes to carbon emissions. That shouldn’t come as a huge surprise given that industry associations like the Canadian Association of Petroleum Producers have fought new greenhouse gas regulations and successfully lobbied to weaken Canada’s environmental laws.

3) Young people aren’t super stoked on the future of the energy industry. Just 16.5 per cent of people 18-34 described it as “essential,” compared to 30.3 per cent overall. What’s more, only 9.3 per cent of respondents aged 18-34 described the oilsands as “essential” compared to 18 per cent for the broader population.

4) While British Columbia has thus far been the focal point of Canada’s pipeline debate, the strongest opposition to the oil and gas sector is actually in Quebec. That’s going to have big ramifications for the proposed Energy East pipeline that would theoretically transport bitumen across that province. When asked to think of the oil and gas sector in Canada and select words that come to mind, 51 per cent of Quebecers came up with “environmental disaster.” Time for Trans Canada's PR people to pop an Advil. (Since Edelman isn't doing their dirty work for them any more …)

Screencap of Alberta Oil Magazine's National Survey on Energy Literacy.

5) The editors at Alberta Oil do some hand-wringing about Canadians' lack of “energy literacy” … although energy literacy in this case appears to be defined as the ability to answer some pretty obscure pro-industry questions.

Take the multiple choice question on how much more carbon intensive the oil produced from Alberta’s oilsands is than the average grade of U.S. crude on a well-to-wheels basis. Only 5.6 per cent of respondents chose correctly.

Ummm hold on, hasn’t there been a raging debate going on for the past few years on oilsands’ emissions intensity?

While Alberta Oil would like you to think the “correct” answer to that question is six per cent, a comparison of oilsands emissions intensities (well-to-wheels) from seven data sources to the 2005 U.S. baseline showed that oilsands emissions range from eight to 37 per cent higher than the baseline. Really, the best answer would probably be that there's a huge amount of variation and disagreement on oilsands emissions intensity.

In good news, very few Canadians can spew out the precise answers industry wants to hear to their technical questions. Oil execs probably aren’t loving that their multi-million dollar advertising campaigns appear to be falling on deaf ears.

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A panel of leading environmental groups expressed concern last week over findings in an Ontario Energy Board commissioned report that suggest oil tanker trains could replace TransCanada's proposed Energy East pipeline if the project isn't approved. 

“We believe the report makes a number of flawed assumptions on rail capacity, and actually goes beyond the oil industry’s own projections,” Ben Powless, a panel presenter at the province's Energy East stakeholder meeting and pipeline community organizer for Ecology Ottawa, said.

The energy board's report, written by Navius Research, estimates the greenhouse gas (GHG) impact of the pipeline — which is project to carry 1.1 million barrels of oil per day — will be "modest" since the oil could could just as easily be brought to market by rail.

“It is highly unlikely that 1.1 million barrels of oil or even half of that could be shipped by rail,” Adam Scott, climate and energy program manager at Environmental Defence Canada, countered. Scott and Powless joined panel members from the Council of Canadians and the Ottawa chapter of 350.org to argue against the report's findings at a stakeholders meeting on Energy East in Ottawa last week.

The Canadian Association of Petroleum Producers (CAPP) projects oil-by-rail in Canada will only hit 700,000 barrels per day by 2016. Even if sufficient additional rail capacity were proposed, the panel found it “overly optimistic” to assume public support in light of recent oil tank car explosions, such as the tragedy in Lac-Mégantic.

“We have trouble believing more oil-by-rail won’t cause public opposition,” Powless said.  

Climate impacts of Energy East debated

Navius’ report is one of only two studies assessing the GHG emissions from a fully operational Energy East pipeline. By assuming Energy East’s 1.1 million barrels will be extracted regardless of the pipeline's approval, the report sees only a 1.2 and 10.2 megatonnes-of-carbon increase in Canada’s carbon footprint due to Energy East. 

“Energy East will likely increase emissions from 'well-to-tank' (extraction to refineries) in the rest of Canada, but the impact is likely to be relatively modest,” the report concludes.

Navius’s findings differ greatly from the first study on Energy East’s potential GHG emissions by the Pembina Institute, an Alberta-based energy think tank:

“The crude production needed to fill the Energy East pipeline would generate an additional 30 to 32 million tonnes of carbon emissions each year — the equivalent of adding more than seven million cars to Canada’s roads.” 

The Pembina study does not assume oil-by-rail will replace Energy East if the pipeline is not constructed, leading to constraints on production in the oil patch.

Ontario’s environmental leadership on the line with Energy East

“Energy East is Premier Kathleen Wynne’s Keystone," Muthanna Subbaiah of the Ottawa chapter of 350.org said at the meeting. 

"President Obama said he will veto Keystone XL. Wynne needs to reject Energy East.” 

The province has talked much about being a climate leader and is hosting an international climate summit this summer, but attracted criticism over its position on Energy East. Ontario Premier Wynne recently stated her government will only consider the GHG emissions from Energy East that occur within Ontario, meaning the climate impacts from developing oil in the Alberta oilsands will be excluded from consideration.

Navius’ report for the Ontario Energy Board finds the pipeline will cause an 0.4 per cent increase in GHG emissions in Ontario. These emissions will be almost exclusively from pipeline pumping stations running on either natural gas or Ontario's relatively clean electricity.

“The Ontario government needs to step up and protect us,” Andrea Harden-Donahue, energy and climate justice campaigner with the Council of Canadians, told the audience attending the public meeting.

The panel also voiced concerns about TransCanada’s safety record, the effects of a oil spill on the province’s natural environment and the fact TransCanada’s application for the pipeline is incomplete.

“I don’t know of a clearer warning than the Kalamazoo spill,” Harden-Donahue stated.

The Kalamazoo spill in Michigan in 2010 remains the largest inland pipeline oil spill in U.S. history, and cost well over one billion dollars in cleanup costs. The Enbridge pipeline ruptured when the pipeline's external polyethylene tape coating became unglued, allowing moisture to corrode the pipe.

Ninety-nine kilometers of the existing natural gas pipeline TransCanada plans on converting for the Energy East project in Ontario is coated with polyethylene tape.

Image Credit: Ecology Ottawa

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Vivian Krause has spent years scrutinizing how Canadian environmental groups are funded, claiming she's just asking "fair questions."

But as the blogger-turned-newspaper-columnist has run rampant with her conspiracy theory that American charitable foundations' support of Canadian environmental groups is nefarious, she has continually avoided seeking a fair answer.

If Krause were seeking a fair answer, she'd quickly learn that both investment dollars and philanthropic dollars cross borders all the time. There isn’t anything special or surprising about environmental groups receiving funding from U.S. foundations that share their goals — especially when the increasingly global nature of environmental challenges, particularly climate change, is taken into consideration.

Despite this common-sense answer, Krause’s strategy has effectively diverted attention away from genuine debate of environmental issues, while simultaneously undermining the important role environmental groups play in Canadian society.

Creating Diversions a Trademark of Oil Industry Strategy

This diversion strategy is a well-known tactic of the oil industry. A strategy document leaked yesterday details how one of the world’s most powerful PR firms, Edelman, advised TransCanada to undermine opponents to the Energy East pipeline.

Edelman recommended TransCanada apply pressure to opponents by “distracting them from their mission and causing them to redirect their resources.” To achieve that, Edelman advises TransCanada to work with “supportive third parties who can in turn put the pressure on, particularly when TransCanada can’t.”

Sound familiar?

In Vivian Krause's resume, she proudly takes credit for spawning a Senate inquiry and Canada Revenue Agency audit — distractions that forced environmental groups to spend time defending themselves, rather than doing their important work as watchdogs and advocates for environmental protection.

While Krause has been busy maligning the funding of Canadian environmental groups, very little attention has been paid to where Krause gets her bread buttered.

Krause Receives 90% of Income From Resource Industries

Krause frequently claims her research is independent (PDF) and that her work is unaffiliated with any industry — yet she has admitted that since 2012, more than 90 per cent of her income has come from oil, gas and mining interests through honorariums and speaking fees.

Krause has been paid as much as $10,000 to speak to energy executives. While she may not be directly employed by the fossil fuel industry, her work certainly aligns with that industry’s interests.

Groups paying Krause speaker’s fees included the Canadian Association of Petroleum Producers, the Canadian Energy Pipeline Association, the Atlas Economic Research Foundation, the Association for Mineral Exploration and the Vancouver Board of Trade.

Large speaking fees are increasingly being used as a handy way to support the work of industry allies without directly employing them.

To see just how contentious speaking fees can be, take a gander at the recent Rex Murphy or Peter Mansbridge controversies. CBC ended up adjusting its policy, requiring hosts to disclose their speaking fees.

What Was Vivian Krause’s Argument Again?

So let’s get this straight: Krause, who has relied on speaking fees from the multinational resource sector for 90 per cent of her income for the past three years, argues that Canada’s environmental organizations are fronts for U.S. interests because they receive a portion of their funding from across the border?

Despite the spurious logic, Krause is still given a platform to spread her misleading information in the Postmedia chain of newspapers, including the Financial Post and The Province, as well as on Global News shows where she's a regular panelist on Unfiltered with Jill Krop.

While Krause may spin a mysterious tale, the answer is simple: philanthropic dollars crossing borders to support work on global issues is the norm. And Canadian charities are required to disclose all significant donations from foreign sources annually.

The Real Debate Canada Needs

The continued debate over the funding sources of the environmental community is simply a diversion tactic that favours the fossil fuel industry's desire to avoid having the real debate about Canada’s energy future.

The latest report from the Intergovernmental Panel on Climate Change urges nations to phase out fossil fuels immediately to avoid the worst impacts of global warming.

The report puts responsibility squarely on the shoulders of our elected leaders, saying they can “either put policies in place to achieve this essential shift, or they can spend the rest of their careers dealing with climate disaster after climate disaster.”

But Canada won’t meet its 2020 international climate target, according to Environment Commissioner Julie Gelfand.

“The federal government does not have an overall plan that maps out how Canada will achieve this target. Canadians have not been given the details about which regulations will be developed, when, nor what greenhouse gas reductions will be expected,” Gelfand wrote in a report last month.

Now that China and the U.S. have signed a deal agreeing to cut emissions, Canada is left with even fewer excuses not to act.

Meantime, the federal government’s mandate to advance an energy superpower agenda marches forth, resulting in controversy across the country — from the Kinder Morgan fiasco on Burnaby Mountain, to the First Nations legal battle against Enbridge Northern Gateway, to the Athabasca Chipewyan and Beaver Lake Cree First Nations’ fight to prevent oilsands expansion on their territory, to efforts to ban fracking in Nova Scotia.

These efforts are not the outcome of foreign conspiracy — they’re the outcome of a lack of any sensible national conversation about how to develop our natural resources while meeting our international climate change commitments.

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